Burger King has surpassed Wendy’s as the second-largest chain in the sector.
The fast food chain posted a 1.6% increase in sales last year during an industry-wide slowdown, according to research firm Technomic. Wendy’s sales decreased by 0.4% in that time.
In just five years, Burger King is almost unrecognizable as a company.
Burger King’s young management team, led by 33-year-old Daniel Schwartz, is impressing analysts at RBC Capital Markets.
“Whopper aside, we see few similarities between the Burger King of 2010 and the Burger King of today,” the analysts write.
Here’s how Burger King managed a turnaround.
1. New management.
“These days … Burger King is behaving more like a startup than a typical burger chain,” writes Devin Leonard at Bloomberg Businessweek.
2. Refranchising virtually all company-owned restaurants.
By outsourcing the operations part of its business, Burger King has been able to retain more cash for investments.
3. Huge international expansion.
Executives made franchising easier for overseas restaurants, leading to rapid growth.
4. Focus on controlling costs.
Schwartz helped reduce Burger King’s corporate headcount to 2,425 from 38,884 by refranchising restaurants, meaning those workers now report to franchise owners.
He also axed many executive perks, including lavish offices and a $US1 million annual party at a chateau in Italy, Leonard writes.
5. US makeover.
The company pared down the US menu and got new equipment to speed up operations.
Burger King also doubled down on its marketing strategy to appeal to young and cash-strapped customers.
6. Tim Hortons acquisition.
Burger King recently acquired the Canadian coffee chain Tim Hortons. Morgan Stanley analysts believe that Tim Hortons will have more than 600 international locations in the next three years. The chain is also expected to add locations in the US.
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